New Orleans has always been a city of booms and busts. The most recent boom came in the late 1970s when the price of oil from the Gulf of Mexico reached $35 a barrel. New Orleans reveled in its prosperity. More than a billion dollars was spent on new hotels and office buildings.
The bust came shortly thereafter, in the early 1980s when the price of oil dropped to $10 a barrel or even less. Thousands of businesses and individuals were thrown into bankruptcy.
The bust lasted longer than the boom, with the bad times extending into the mid-1990s.
But, now New Orleans is in the midst of one of its periodic renaissance movements when everything seems to be coming up roses again, as new civic and political leadership develop a list of triumphs that put New Orleans once again in the hunt for renewed top-drawer status in the southeastern US.
Anthony J. Mumphrey, president of Mumphrey and Associates, a planning group, and formerly a member of the University of New Orleans School of Urban Studies faculty, says, “In the 18th, 19th and 20th centuries, New Orleans was the ultimate boom and bust city. Until 1900, it was the price of cotton that determined whether the city was up or down. In the last half of the 20th century, the price of oil was the determining factor. Now, under new leadership, New Orleans is building a new economic model based on international trade and tourism.”
Leading the charge is Mayor Marc H. Morial, a 41-year-old graduate of the Wharton School of Business at the University of Pennsylvania and the University of Georgetown Law School in Washington DC. He is the son of the late Dutch Morial, New Orleans’ first black mayor. The younger Morial was elected in 1994 and reelected in 1998 with more than 90% of the vote.
“Part of our challenge is the diversification of our economy,” says Morial. “The Port of New Orleans remains one of the great maritime jewels in the world and is busily refitting itself for the challenges of the 21st century.
Of course, the Mississippi River, with unparalleled access to the northeastern and midwestern US remains the Father of Waters in North America. Deep-water drilling for oil in the Gulf of Mexico and rising prices has given impetus to the oil business in the Gulf South,” he says.
New Orleans’ history, food, music and ambiance continue to make it one of the prime tourism destinations in the US and a magnet for the largest conventions. But New Orleans had fallen short as a city and a region when it came to air transportation and maintaining its trade ties to Latin America and the Caribbean.
Says Morial, “Many issues have been addressed and the ensuing solutions have created a legacy of progress that will continue indefinitely. But, first, we had to address the problem of urban crime and police corruption that had gotten out of hand and had reached epidemic proportions.”
When Morial was elected in 1994, he inherited a city that had the label of the murder capital of the US and was reputed to have the most brutal and corrupt police department in the country.
The mayor personally led a nationwide search for a new police chief, before settling on Richard Pennington who had won a sterling reputation as a rising law enforcement star in Washington DC. As superintendent of police of New Orleans, Pennington has been sensational.
Under his direction and with Morial’s full support, murders have been reduced by 64%, violent crime is down by half and scores of corrupt or brutal police officers were dismissed with more than a dozen going to jail, including one on Death Row.
The size of the police department was increased to 1,700 from 1,100 with pay increases and increased recruiting.
Sandy Shilstone, head of tourism and marketing for New Orleans, says, “In terms of the quality of our police department, we’ve moved from worst to first in about five years.”
She notes that safer streets had economic benefits as well as improving the quality of life for residents, tourists and commuters. “Tourism has become a driving force in our economy, accounting for more than $3 billion a year and more than 60,000 jobs,” says Shilstone. “The Ernest N. Morial Convention Center on the riverfront offers conventions more than 1 million square feet of exhibition space on one level.”
Helped by three major expansions, the Convention Center has become a catalyst for tourism. In 1991, all convention facilities in New Orleans hosted just over 1,000 conventions attended by fewer than 900,000 visitors. In 1998, before the third phase of expansion of the Convention Center opened, all the city’s convention facilities hosted more than 3,300 meetings attended by 1.25 million visitors.
But in 1999, after the expansion opened, the Morial Convention Center hosted events that drew more than 1,025,000 visitors. Plans for a fourth expansion are already underway.
The reduction in crime and the growth of tourism freed Morial and civic leaders to work on two key problem areas – the rebuilding and expansion of the New Orleans International Airport and international business. “When I came into office, the airport could as easily have been located in Wisconsin or Minnesota,” says Morial. “It was nondescript, giving no hint of our geography, culture, music or ambiance. It was also ugly and too often dirty. The truth is that our political and civic leadership just went to sleep for 30 years where the airport was concerned. They allowed other cities to pass us by, winning the competition for hubs. Our airport had too few direct and non-stop flights, too few international connections and too many flights connected to a hub where travelers had to change planes, walking endless miles in terminals.”
Morial named Justice Revius O. Ortique Jr., the first African-American to serve as a civil district court judge in New Orleans and the first of his race to serve on the Louisiana Supreme Court, as the chairman of the New Orleans Aviation Board. Morial and Ortique launched an $850 million rebuilding and expansion of the airport. Today, two new terminals have been built and two others rebuilt.
Two new cargo facilities have been added, including the first-ever on-site perishable center with 10,000 square feet of refrigerated space. The airlines have responded. Today, there are some 95 direct and non-stops flights to domestic and overseas destinations.
Southwest Airlines now logs more than 50 flights a day into and out of New Orleans, a hub-like level of activity with plans for further expansions in 2000.
Northwest Airlines has just announced a new flight from New Orleans to Memphis to Boston to Amsterdam. TWA has begun service from New York City to New Orleans to Mexico City.
United Airlines now adds larger aircraft to its New Orleans connections from Los Angeles, Denver and Washington D.C. during Mardi Gras and during major conventions. An American Airlines executive says, “New Orleans once had landing fees that were among the highest in the nation. These have been reduced by the current administration with plans for further reductions. We’ve responded to New Orleans because New Orleans has responded to us.”
Companies that invested in the New Orleans tourism industry at the bottom of the market have seen handsome dividends. Robert “Tico” Bevier, general manager of the swank downtown DoubleTree Hotel, which was acquired by its present owners in 1986, describes the timing of his company’s investment in the New Orleans hotel market as having been perfect. “1986 was just about as low as it gets,” Bevier recalls, adding that in its first year under new ownership, the hotel had a feeble occupancy rate of around 30%. This rose to 50% in 1987 and to 72% in 1988, when the Republican Convention was staged in New Orleans. “1988 was the turning point and since then we have not looked back,” says Bevier.
Part of the changing environment in New Orleans is greater aggressiveness on the part of universities and the banking sector.
At the University of New Orleans, Chancellor Greg O’ Brien, with the help of the Louisiana congressional delegation, has lured the Naval Information Technology Center to a lakefront business park adjacent to his campus. “We have a dream,” says O’Brien, “of a ‘Silicon Swamp’ in South Louisiana and Metro New Orleans. The Naval IT Center was the first piece and it has already drawn some 25 to 30 software companies to the city.”
In much the same way, a once insular banking sector is increasingly looking to become more international in its outlook. At Bank One in New Orleans, for example, which entered the city’s market in 1998 through the acquisition of the local First National Bank of Commerce, Vice President William Cummins says that last year the bank doubled the amount of international banking it handled, predominantly in the area of foreign exchange.
“I wish every year could be like 1999,” says Cummins. “Our challenge is build on 1999’s success.”
Latin American Gateway
Morial and the city’s civic leadership, including BellSouth Louisiana President Herschel Abbott Jr., have also focused attention on rebuilding New Orleans’ past reputation as the Gateway to Latin America.
The city has both sent out and hosted trade missions to and from Latin America and the Caribbean, as well more high-profile events that have brought to the city leading policymakers from throughout the region. In May 1996, Western Hemisphere finance ministers gathered in the city for the Economic Summit of the Americas. New Orleans also played host to similar gatherings for the hemisphere’s transportation ministers in 1998 and its energy ministers in 1999.
Julio Guichard Jr., the city’s director of international relations, says, “Until Mayor Morial’s initiative, New Orleans had not hosted a major international meeting in 40 years. Hopefully, what he has begun will continue.”
This month, the Inter-American Development Bank meeting brings more than 7,000 visitors to New Orleans, including several national leaders and many finance ministers from Latin America, the Caribbean, Europe and Asia. “We see the IDB meeting as a clear indication that we have regained our credibility as a gateway city and a logical meeting place for hemispheric leaders,” says Morial.
But beyond successfully bringing international meetings to the city, Morial and the civic leadership want to build a more broadly diversified economy taking advantage of New Orleans and the Gulf South’s proximity to Central America. “We have the advantage,” says Abbott, “of a closely-knit business, banking and policy-making community many of whose members have direct connections to the economic and social structures of Central America. We are building new business relationships based on these close ties.”
The Honduran Connection
New Orleanians never weary of telling visitors that in terms of population, theirs is the “third-largest city in Honduras,” or that New Orleans is the “northernmost city in the Caribbean.” Scores of top-ranking politicians and business leaders from throughout Central America were educated in New Orleans’ highly-rated universities. All of these factors, says Abbott and other business leaders, give New Orleans a special edge that was not utilized enough in the past in the competition with Miami and Houston. “We are entering a new phase in which we are aggressively pursuing business in Central America,” says Guichard. “We can’t wish away the mistakes of the past, but we also don’t have to repeat them.”
Probably the most imaginative and ambitious project aimed at fusing southern Louisiana’s links with Central America with its higher educational credentials and supporting infrastructure is the Louisiana/Honduras Alliance. The project has been developed by MetroVision (the Economic Development Partnership for the New Orleans Chamber of Commerce and Southeast Louisiana) in conjunction with five Louisiana-based universities and a number of representatives from the Honduran public and private sectors.
MetroVision is hoping to raise funding from USAid for this initiative, which aims at what the New Orleans Chamber of Commerce describes as “education and training as an essential element to help rebuild the economic vitality of Honduras as a means of improving the quality of life of its people and enhancing the nation’s role in the global marketplace.”
What is in the project for New Orleans?
Plenty, says Michael Conwell, senior vice president and manager of international banking at Hibernia Bank and chairman of Metrovision’s international business and trade development initiative. Describing the project as “a bit visionary,” he says that if it is successful, it will provide a blueprint that could be replicated by scores of other emerging markets, and hence create “a new industry for Louisiana, which we call the knowledge industry.”
Conwell also expects to see other tangible benefits from the Honduras Alliance. “To a global engineering firm, a $50 million port project in Honduras might not even appear on the radar screen,” he says, “but we have very well qualified smaller companies in the New Orleans region who would die for a $50 million project of this type.” New Orleans’ leaders say they are preparing to focus their sights on the big economies of Mexico, Brazil and Argentina.
“In many respects, the globalization of the world’s economy has given New Orleans an opportunity to recapture our position as one of the world’s leading international trade cities,” says Morial. “We have one of the greatest multi-modal transportation systems anywhere in the US, which means that goods coming into our city can find their way to any region of the United States via rail, truck or by a transition from an ocean going vessel to a barge.”
The two jewels in New Orleans’ transportation system are the natural treasures of the Mississippi River, Louisiana’s priceless bridgehad to all points north, and the man-made asset of the city’s port, which handles more than 10.5 million tons of general cargo each year, generating some 94,000 jobs statewide with annual earnings of more than $2 billion.
A Spruced Up Port
Over the past decade, the Port of New Orleans has invested $300 million in new wharves, terminals, marshalling yards, cranes and transportation infrastructure. Ron Brinson, the Port’s president and CEO, believes New Orleans will have a chance in the 21st century to redefine itself as the key conduit for trade between North and South America over the coming years. “When President Clinton first visited the Port of New Orleans in 1993,” says Brinson, “I remember telling him that trade with Latin America would be the most important part of our strategy going forward.”
Today, Latin America promises the same dynamics as the economies of the Pacific Rim did in the early 1990s. Although the region may not move as fast or as dramatically as Asia, we are convinced that western hemisphere trade is set to grow by 6% to 8% a year and that 90% of this will be water-borne. Our challenge is to take advantage of this growth, because it could double our cargo volume within 10 years.”
For Morial, Abbott, Brinson and dozens of other leaders in New Orleans and the Gulf South, the 21st century beckons with opportunities. For one who has studied the history of the region, like Dr. Mumphrey, the test of this new generation of leadership is whether they can usher in a long boom of prosperity, unbroken by repetitions of the busts of the past.
“Each generation faces unique challenges,” says Mumphrey, the consultant. “In its almost 300 years of history since the arrival of the French and Spanish in the Southern New World, New Orleans has experienced glorious highs and terrible lows. For Mayor Morial and his generation, the challenge is to build an economic infrastructure that can generate a consistent unbroken prosperity that will carry over to their grandchildren and great-grandchildren. Whether they can do it remains to be seen, but their energy and vision are both commendable and targeted on real goals that are achievable.”
Marc Morial, mayor of New Orleans since 1994, talks New Orleans, present and future.
mayor of New Orleans
How would you describe the progress that the City of New Orleans has made since your election in 1994?
I think New Orleans has really been the American comeback story of the 1990s, because of the reduction in crime, the diversification of the economy, the growth in the technology sector and the growth in tourism and conventions. No other city in the US made the changes that we made. People are excited about what’s happening in this city, and the mood of the city has changed. Ten years ago people here were depressed and they were leaving the city because they did not know what the future held. Now people and investment are coming back.
What role do you see New Orleans playing as a transportation center acting as a conduit for trade between North and South America?
We have transportation facilities in New Orleans that very few cities can match. The Port of Miami serves Florida and the southeastern US. Our port serves the entire industrial heartland of the midwest, which is why Ron Brinson [chief executive of the Port of New Orleans] has consistently emphasized the importance of building up and modernizing the port’s facilities. He’s thinking long term, and looking to where the port will be in 20 or 25 years time, rather than next week or next month. The same is true of the authorities at the airport, which is why we have a $1 billion master plan to improve the airport by adding a new runway and upgrading the cargo facilities.
We have always played a dominant role in terms of trade with Central America, but I believe that as the economies of countries like Brazil and Argentina continue to grow, and as goods and services continue to flow between the US and consumers in South America, the Port of New Orleans will emerge as an important player in the new global economy.
And as an important tourism destination?
We’re trying to put New Orleans on the map.
We’re trying to put the city on everybody’s lips in Latin America and elsewhere. We think we have a niche, which is that for people around the world New Orleans is a much more interesting place to visit than many other cities in the US. And because it’s an interesting place to visit it is also an interesting place to do business. We have the architecture, the history and the climate to attract visitors. We also have culture, jazz, good food, a compact downtown and great facilities for trade shows and conventions.
In terms of tourism, we think we haven’t even begun to tap the potential for Latin American tourism. We have tried to do more to tap that potential. I’ll give you an example. I remember when I first looked at the signs in the airport they were only in English, and I said at the time how can we be an international airport and only have signs in English? Now we have signs in Spanish, French and Japanese.